By - Jim Vess

Global wind energy growth is being driven by U.S. and China policies

Energize Weekly, July 17, 2019

New wind energy projects worldwide are forecast to average 71 gigawatts (GW) a year from 2019 to 2023 and 76 GW a year from 2024 to 2028, according to market report by Wood Mackenzie Power & Renewables.

The report also upgraded wind energy additions by 11 GW between 2019 and 2028 – a 1.5 percent increase over the previous target number.

“Overall, the outlook is positive and global wind power continues to prosper due to both economic and social benefits,” Luke Lewandowski, Wood Mackenzie Power & Renewables director, said in a statement.

The U.S. market growth was upgraded by 16 percent quarter-on-quarter as a suite of state and federal policies have stimulated activity.

The federal Production Tax Credit (PTC), which provides a tax break for each megawatt-hour of electricity produced in an installation’s first 10 years, is set to be phased out by the end of the year.

Wood Mackenzie said that developers and the utilities and corporations that purchase the power are trying to take advantage of the PTC before it expires.

Some states are also setting targets for offshore wind development and increasing the level of renewable energy required in their Renewable Portfolio Standards for utilities.

Latin America was projected to have a 1 percent quarter-on-quarter increase driven by activity in Mexico and Brazil.

“Demand in Brazil’s free market should positively impact expectations from 2020 to 2022, while an uptick in C&I [commercial and industrial] demand in Mexico will support a record year in 2019,” Wood Mackenzie said.

Europe overall has a “dismal” outlook, and the market report calls for a 2.2 GW downgrade in activity.

“Permitting challenges and undersubscription of onshore tenders in Germany and France have impeded growth,” the report said. “However, an increasing appetite for unsubsidized projects and a proliferation of demand from the C&I segment across Northern Europe both support a modest 0.6 percent upgrade for Europe” quarter-on-quarter.

Increasing competition from solar power has been a challenge for the African market, as well as slow project development due to political instability and weak support mechanisms. Wood Mackenzie is calling for a 2 percent downgrade for the continent quarter-on-quarter.

Chinese wind development got a boost from government policy deadlines, leading to a 2.9 GW increase in the quarter-on-quarter forecast.

“Onshore developers are rushing to comply with a new policy that requires projects to be commissioned by the end of 2020 in order to capitalize on feed-in tariffs (FIT) before a subsidy-free era begins,” Wood Mackenzie said.

Offshore developers must commission projects before the close of 2021 to access the current offshore feed-in tariff.

In other parts of the Asia-Pacific region, there are market challenges. India is looking at a 4 percent downgraded quarter-on-quarter due to unfavorable market conditions. In Thailand, the government focus has shifted to other technologies, leading Wood Mackenzie to reduce by 37 percent the country’s 10-year outlook for wind power.

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